commentary

[RE]fuel Market Report Commentary

9 Mar 2018

The week started with the RTFO being signed off in the House of Lords in the final step prior to its acceptance onto the statute books.

While that provided the certainty some market participants had felt was lacking, the gathering consensus had been that the changes would be implemented as expected and the clearance of the final hurdle did little to move prices, despite a significant hike in the contribution of biofuels to the UK’s fuel pool just weeks away.

RTFCs values remained in the doldrums, with Year 10 activity particularly muted, and Year 11 still lacking vim.

Market sources put values for Year 10 certificates at somewhere between 15 p and 16 p, while a second source put bids just above 14 p with offers around 15.5 p, with little sign of trading.

“For me, Year 10 – it’s over, definitely,” one market source said, but the fall in biodiesel prices tightened the theoretical cap once again, as RME falls out of favour as it faces the move towards less stringent summer specification diesels, and UCOME values remain depressed on good supply.

“Basically, we see a bit more demand for UCOME with the spec change… [but] you’ve got a lot of UCOME in the market,” one trading source said with prices coming under pressure as a result.

Market sources put UCOME at a $150/mt premium to FAME 0, down from around $180/mt at the end of January, according to Energy Census data.

With the cap coming down and demand largely absent, Year 10 certificates slipped to 15 p/certificate, while bid levels heard at 16 p for Year 11 left values unchanged at 16.2 p/certificate.

From the beginning of April, UK road fuels will move to summer specification requirements, likely bringing additional pressure to RME biodiesel premiums.

Price Assessments 9 Mar 2018

p/cert. +/-
RTFCw Year 12 xx xx
RTFCc Year 12 xx xx
RTFCw Year 11 xx xx
RTFCc Year 11 xx xx
RTFC Year 10 xx xx
Outright
$/mt
Spread to ULSD
$/mt
Spread to ULSD
p/litre
UCOME xx xx xx
FAME 0 xx xx xx
RME xx xx xx
ULSD xx
USD/GBP xx
RTFC-RHI spread (waste based biomethane)*
p/kWh p/litre
RTFCw Year 11 xx xx
* 3 pence/kWh RHI